On 15 April 2020, the Financial Stability Board (FSB) published a report setting out the financial stability implications of the COVID-19 pandemic and policy measures taken to address them.

The report notes that the global financial system is more resilient and better placed to sustain financing to the real economy as a result of the G20 regulatory reforms in the aftermath of the 2008 global financial crisis. In particular, greater resilience of major banks at the core of the financial system has allowed the system to date largely to absorb rather than amplify the current macroeconomic shock. Those forms of market-based finance that contributed to the 2008 financial crisis pose significantly lower financial stability risks. Financial market infrastructures, particularly central counterparties, have functioned well, despite the challenging external financial and operational conditions. Nevertheless, given the unprecedented scale of the shock, key funding markets experienced acute stress and authorities needed to take a wide range of measures to sustain the supply of credit to the real economy and to support financial intermediation.

The report goes on setting out five principles that underpin the official community’s response to support the real economy. Using these principles, authorities will: monitor and share information on a timely basis to assess and address financial stability risks from COVID-19; recognise and use the flexibility built into existing financial standards to support our response; seek opportunities to temporarily reduce operational burdens on firms and authorities; act consistently with international standards, and not roll back reforms or compromise the underlying objectives of existing international standards; and coordinate on the future timely unwinding of the temporary measures taken.